China and Free Markets

China emerged as the second largest economy in the world in 2010 overtaking Japan.  China has been the big economic growth story of the past decade.  Some economists project it to nearly match the US economy by 2050 (The Growth Map, Jim O'Neill, 2011).  Chinese billionaires abound.  China is the only country in the world where Ferrari advertises on TV.

How, one may ask, can China's indisputable economic success be reconciled with a belief in free markets...?

The answer, however, to this question is quite simple...

"What on earth did you expect would happen after Hong Kong's 1997 takeover of China?"

To be be fair, Hong Kong did not do it all by itself.  They had help from Taiwan, Singapore, Macau and the  global community of overseas Chinese who have invested and supported China's transition to a market economy.  The risk taking and entrepreneurial spirit of the Chinese people could not be denied after the catastrophe of Maoism.

China faced a choice between and Mao jacket and a tailored suit from Hong Kong and it made the only sensible choice.  Good for them.

Mao Jacket

Hong Kong Suit